The White House to maritime carriers: take more agricultural exports… or else
The Biden administration on Friday again urged global ocean carriers to accept more export freight and restore service to underutilized West Coast ports to ease supply chain constraints and to give American farm businesses a fair chance to sell their products in foreign markets. The request indicates that the White House will remain focused on strengthening regulation of the industry next year.
With eastward transport rates 10 times higher than pre-pandemic levels, ship operators are quickly returning empty containers to Asia so they can be reloaded with higher-efficiency import loads to the United States. United Food and feed shippers who previously enjoyed low contract rates are suffering because their products are left behind and lose value while waiting to be loaded.
On Friday, Transportation Secretary Pete Buttegieg and Agriculture Secretary Tom Vilsack sent a letter to a dozen foreign-owned container lines asking them to treat imports and exports equally, to use less congested ports, like Oakland, California and Portland, Oregon, and to provide better service to exporters.
âShippers of produce and agricultural produce grown in the United States have seen reduced service, ever-changing return dates, and unfair charges as containers bypassed regular lanes and rushed to be exported empty. . This imbalance is not sustainable and contributes to the congestion of empty containers which clog ports. Poor service and refusal to serve customers when empty containers are clearly available is unacceptable and, if not resolved quickly, may require further consideration and action by the Federal Maritime Commission, âsaid writes the secretaries.
Over 40% of U.S. container imports pass through the ports of Los Angeles and Long Beach, which were overwhelmed this year when existing infrastructure and manpower capacity could not keep up with record import levels. . More than 100 ships were stacked earlier this week near the coast or across the Pacific Ocean awaiting a berth.
The historic 2: 1 imbalance between imports and exports widened during the pandemic, increasing the motivation of carriers to return empty containers to Asian manufacturing centers. In February, the Agriculture Transportation Coalition and 73 other groups wrote to President Biden and Buttigieg to ask the federal government to stop shipping carriers from denying equipment availability in the heart of the country.
The administration has little influence on carriers to take action, such as allowing more containers to move inland where agricultural exporters are located, which is not in their financial interest. .
While the letter has no teeth, the CMF’s citation suggests it could be a final “please enough” request before Congress and administration decide to crack down on the practices. shipping companies in 2022.
The Ocean Shipping Reform Act of 2021, passed by an overwhelming majority in the House this month and approved by the White House, would bar carriers from declining U.S. exports within a reasonable period of time. The bill places the onus of proof on the carriers rather than the cargo owners that the charges are justified for the late pickup or return of containers to marine terminals. And it allows the CMF to undertake carrier business practice reviews on its own rather than responding to complaints.
A related Senate bill is expected to be introduced in early January. The bill is not identical to the House version sponsored by Rep. John Garamendi, D-Calif., And Dusty Johnson, RS.D. One key difference is that it more narrowly defines the types of acts that carriers would be prohibited from and puts more emphasis on collecting cargo data, according to a source in Washington with close ties to Capitol Hill who did not want not be identified so as not to compromise any of these relationships.
Last summer, the FMC launched an audit of nine of the largest container carriers operating in U.S. markets to find out whether they are using their market power to overcharge shippers on detention and demurrage charges. It is also working with the Justice Department to strengthen economic oversight of foreign carriers in the container trade as part of a White House effort to harness the market power of carriers.
The joint letter “tells me that the administration is really feeling the pressure from farmers and ranchers, who are now more dependent on foreign markets for their profitability,” Marianne Rowden, CEO of the E-Merchants Trade Council and former head of the American Association of Exporters and Importers, said in an email. âThe only way for me to see the administration make a difference is to order these carriers to other West Coast ports through the Coast Guard denying them access to the LA / Long Beach port and saying that the idling of ships off the coast is a national security risk. “
The secretaries urged carriers to use other, less-traveled West Coast ports, pointing to the suspension of service to Oakland by some airlines earlier this year as an example of poor service. The move forced agricultural exporters to truck their crops to ports in southern California, they noted. (American Shipper reported on Friday how the Port of Hueneme is helping a small amount of cargo bypass traffic jams in LA and Long Beach.)
“Restoring service would not only ease congestion at the Los Angeles and Long Beach ports, but would also allow the rapid export of US goods overseas and ease the pressure on the supply of long-haul truckers needed to transport goods from northern California, âofficials said.
Cargo volume at the Port of Oakland declined 20% in October from 2020, which the port attributed to a decrease in marine traffic as carriers diverted ships directly to Asia rather than doing so. another stopover in their regular rotation.
With ocean carriers making record profits, ocean carriers are in a better position than in previous years to add systems and equipment to handle export volumes, said Peter Friedmann, Executive Director of AgTC.
âWe are currently working quietly with a few ocean carriers on specific changes that will benefit both those carriers and the shipping community. When we work with a maritime carrier, our goal is reciprocal: to solve the specific problems encountered by some of our AgTC members, who will then increase their commitments with this carrier. It’s been an effective formula for many years, âhe told American Shipper.
Matt Schrap, who heads the Harbor Trucking Association which represents short-haul dailies in California, suggested that ocean carriers could move empty containers from Los Angeles / Long Beach to Oakland. This would help alleviate the lack of space at the sea terminals at the San Pedro Bay ports and give agricultural exporters access to the containers they desperately need.
Click here for more FreightWaves / American Shipper stories by Eric Kulisch.
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